Though the U.S. and Canada are not part of the “OPEC Plus” group, President Trump has been leading negotiations between Saudi Arabia and Russia to broker a deal and stop their price war. Today President Trump announces an agreement between the major petroleum exporting countries to curb oil production by approximately 10 million barrels per day:
Additionally, there was a loggerhead within the negotiations as Mexico did not want to cut their production by the requested amount of 400,000 barrels daily. Mexico relies on oil as a large part of their economy. AMLO stated his economy could not withstand such a significant drop in state revenue. Economic security is, after all, national security.
President Trump broke the OPEC+ stalemate by agreeing to decrease U.S. production by 300k/barrels allowing Mexico to drop a more manageable 100k/barrels. Trump and AMLO reached an undisclosed agreement where Mexico will reimburse the U.S. later on.
I suspect the “reimbursement” will be more, well, strategically geopolitical than financial. [*nudge-nudge*, *wink-wink*, *say-no-more/say-no-more*] President Trump has an uncanny knack of collecting leverage for later, more strategic, purposes. Just sayin’.
(VIA CNBC) […] Sunday’s emergency meeting — the second in four days — came as oil-producing nations scrambled to reach an agreement in an effort to prop up falling prices as the coronavirus outbreak continues to hammer demand. The agreement also ends a price war that broke out between Saudi Arabia and Russia at the beginning of March, which further pressured oil prices as each sought to gain market share.
The group, known as OPEC+, initially proposed cutting production by 10 million barrels per day — amounting to some 10% of global oil supply — on Thursday, but Mexico opposed the amount it was being asked to cut, holding up the final deal.
Talks continued on Friday when energy ministers from the Group of 20 major economies met, and while all agreed that stabilization in the market is needed, the group stopped short of discussing specific production numbers.
Under OPEC+’s new agreement, Mexico will cut 100,000 barrels per day, instead of the 400,000 barrels per day it had initially been asked to cut.
The 9.7 million barrels per day cut will begin on May 1, and will extend through the end of June. (read more)
With such a significant slow-down in global oil demand due to the coronavirus mitigation efforts, massive tanker ships have been loaded with oil and sit at sea awaiting the global economy to restart generating the need for their cargo.
Two Weeks Ago…. President Trump and Defense Secretary Esper announced a major deployment of U.S. military to interdict narcotics trafficking from Central America.
On the surface the effort to deploy naval assets to the Caribbean and southern pacific is justified based on intelligence drug cartels will exploit the coronavirus pandemic to ship more narcotics into the U.S.
However, in the bigger picture there’s also a likelihood the Chinese Communist Party would work with their geopolitical allies in Central American regimes to further weaken the U.S. during a time of increased vulnerability.
In times of war, or severe geopolitical confrontation, exploiting a vulnerability is a common strategy. Therefore it’s a smart and prudent geopolitical move for President Trump and U.S. military to take very aggressive action against the cartels and their communist sympathizers. There’s more going on here than appears on the surface.
Ergo, sometime in the future…
Barr: “The president is very thankful for your cooperation“…
AMLO: “So you’re saying this is an offer I cannot refuse?“..
Barr: “The President is very thankful for your cooperation“…